Big banks are on the move with their gold, commodity-price targets

No less than four investment banks have adjusted their commodity calls in the last 24 hours. And one, Goldman Sachs, has revisited the theme twice.

So here’s Tuesday’s roundup.

Deutsche Bank, which made the changes as part of its quarterly review, said a slower-than-expected recovery for China and expectations for Fed tapering are the major rationale behind the cuts. Oil forecast trims are based on a bullish dollar outlook:

As for gold, there was a stampede to change forecasts back in April, when prices were trading around $1,462, but they were already moving after a big drop in gold, which is nearly $200 lower now.

What to do, what to do. Well, let’s start by complaining:

“I love the way banks change their targets on commodities after the moves have happened. Talk about horses and stable doors and their customers end up wearing their long positions,” says Michael Hewson, senior market analyst at CMC Markets. “Nowhere is this better demonstrated than in the gold price after it broke below $1,500. This technical breach suggests that further upside is likely to remain limited and the prospect of dips towards $1,150 remains an ongoing risk.”

It’s a case of we really should know before these big banks are telling us. As Hewson points out, commodity prices have been weak for some time, with copper prices struggling since the end of 2011 and gold has limped along despite “continued elevated levels of monetary stimulus.” Oil prices, he says, remain demand driven.

“This suggests that with the outlook for economic growth set to remain weak, any upside in prices will ultimately be decided by demand. With supply concerns currently not an issue and growth likely to remain subdued then the risk remains to the downside and has for quite some time,” says Hewson.

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